5 Issues You Ought to Know About FHA Mortgages
Many people still have misunderstandings about the FHA home loan program. They may think that they are “making too much money” to be a successful applicant (aren’t they, FHA home loans are not need-based loans) or think that they wouldn’t qualify because they want to build a home instead of one to buy an existing Bauhaus. (Also not true, FHA loans include those for building a home rather than buying one).
What are the facts about FHA home loans that you need to know in order to make a more informed decision about your loan selection?
FHA Loan Fact: FHA mortgages are for every financially qualified borrower
Unlike the USDA Home Loan Program, which offers tailored mortgages for those falling under the income guidelines for that loan program, FHA mortgages have NO income limits or purchase price restrictions, except for the usual FHA loan limits that apply per county.
FHA Loan Fact: FHA loans can be used to purchase condos, RVs, and more
An FHA mortgage allows you to buy real estate that is taxable as real estate. That means your desire for a condo, townhouse, RV, or prefab home can be met with an FHA mortgage. Things that cannot be classified as real estate, like RVs or houseboats, cannot qualify for an FHA mortgage.
FHA Loan Fact: Lower FICO scores may qualify
FHA loan standards allow those with FICO scores 580 or higher to qualify for maximum funding. Beyond that, your lender may have standards – they are allowed to – so it is worth looking for a lender. Remember that FHA mortgages are government sponsored so there is less risk for the lender. This is why you can qualify with lower credit scores as well.
FHA Loan Fact: You can buy a home of up to four units
Did you know that an FHA loan can be approved for a property of up to four units? If you wish, you can become a landlord and rent out the units you do not use yourself. FHA loans are intended for the owner / user, so don’t expect to be able to use an FHA mortgage to buy a home that you do not intend to live in as your primary address.